Standing Committee E

[Mr. Peter Atkinson in the Chair]

Communications Bill

Schedule 14 - Media ownership rules

Amendment moved [this day]: No. 406, in 
schedule 14, page 411, line 5, at end insert— 
 Channel 5 Licences 
 No. 406, , Ban on newspaper proprietors holding a Channel 5 licence 
 6A (1) A person is not to hold a Channel 5 licence if— 
 (a) he runs a national newspaper which for the time being has a national market share of 20 per cent. or more; or 
 (b) he runs national newspapers which for the time being together have a national market share of 20 per cent. or more. 
 (2) For the purposes of this paragraph, each of the following shall be treated as holding a Channel 5 licence— 
 (a) the actual licence holder; and 
 (b) every person connected with the actual licence holder. 
 (3) The provisions of paragraphs 2 to 4 of this Schedule shall apply for the purposes of this Part of this Schedule insofar as they relate to national newspapers as if a Channel 5 licence were a licence to provide a Channel 3 service.'.—[Nick Harvey.]
 Question proposed, That the amendment be made.

John Whittingdale: I shall not detain the Committee for long. It will not surprise the hon. Member for North Devon (Nick Harvey) to know that I do not support the amendment. However, I pay him credit for following the logic of the case. As was pointed out by my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), it is hard to understand why the Government think it necessary to maintain a restriction for one channel but not for the other. Although there is a huge disparity between the two at the moment, that may not always be so, and if one believes that it is necessary to protect Channel 3—Committee members know that I do not—that should also, in all logic, apply to Channel Five.
 Secondly, I welcome the hon. Gentleman's honesty in admitting that all this is aimed at Rupert Murdoch. This morning, the Minister was at pains to try to claim that it is not. In practice he, or his company, is likely to fall foul of the provisions should he ever seek to acquire Channel Five or a Channel 3 licence. I can see the logic and the transparency of the amendment but, for the reasons that I rehearsed this morning as to why I think it inappropriate to maintain the restrictions on Channel 3, I believe even more strongly that it would be inappropriate to have them on Channel Five. Therefore, I fear that I cannot support the amendment.

Kim Howells: Part 1 of schedule 14 sets out the proposed restrictions on licence holding. In simple terms, anyone who owns national newspapers with more than 20 per cent. of the market cannot hold a Channel 3 licence. The amendment, as the hon. Member for North Devon has informed us, proposes to impose the same ownership restrictions for Channel Five.
 I shall try to explain our thinking about the Channel Five licence under schedule 14. We want to impose ownership rules only where they are necessary to safeguard democracy. Channel Five is not a large enough service to need the same protection as ITV, as it has a relatively small audience—about 6.5 per cent. It does not reach the whole UK population and has fewer public service commitments than ITV. We are therefore removing all limits on Channel Five ownership. It will be able to attract investment from any newspaper, domestic television or radio company, or non-European company. We want to give Channel Five, a small channel, every chance to grow. It is growing and has been an enormous success. Under the new rules, it can use the investment to develop and provide more competition to ITV, which would be beneficial for viewers and good for the market. 
 Were the nature of the service to change, however, and its audience share to increase under new ownership, it would be possible to alter the public service obligations of the Channel Five licence. For example, Ofcom could increase the channel's original programming quota to ensure that the channel remains of a consistently high quality, or the Secretary of State could increase, by order, the programming quota for independent productions or introduce a nominated news-provider system for Channel Five. 
 I understand the concerns of the hon. Member for North Devon, but I hope that he has been convinced that they are unfounded. I hope that he will withdraw his amendment.

Nick Harvey: I shall think a little more about what the Minister has said. However, he seems to have restated the Government's view that the only reason for treating the channels differently is their present difference in size.
 I am disappointed that the Minister did not refer to my points about News International and Mr. Rupert Murdoch's interests. In effect, Mr. Murdoch also has control over the satellite platform. To return to the point made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), this is, in a sense, the Rupert Murdoch amendment. There is nothing intrinsically wrong with the idea of Rupert Murdoch being able to bid for a Channel 3 or Channel Five licence; but the problem is that he already controls the satellite platform. For the reasons that I outlined earlier, I am concerned about someone controlling three major strands of ownership.

John Whittingdale: The hon. Gentleman seeks to justify his amendment on the basis that Rupert Murdoch owns a satellite platform. If Mr. Murdoch were to divest himself of his newspaper interests, he
 would not be caught by the hon. Gentleman's amendment. However, he would, I presume, still face the same objection.

Nick Harvey: He would, and ought, to continue to, at least for the time being. Perhaps that point should be addressed by a later amendment. I am grateful for the hon. Gentleman's suggestion.
 The Minister does not seem to have answered my points but I will consider what he has said. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Richard Allan: I beg to move amendment No. 632, in
schedule 14, page 411, line 5, at end insert— 
 'Part 1A 
 Restriction on holding of licences to provide Channel 3 services or Channel 5{**qc**} 
 6A No one person may at any time hold a licence to provide a Channel 3 service and a licence to provide Channel 5.'.
 The amendment continues the theme of the previous amendment. We seek to establish a protected position for the diversity of output of Channel 3 and Channel Five. As my hon. Friend the Member for North Devon said, we believe that those channels have a special role as public service broadcast channels. We make a clear distinction between the public service broadcast channels and the range of television channels that are much more open to be bought by people who—either on their own or in conjunction with others—want to come into the market. 
 Channel 3 and Channel Five have distinct missions. With the amendment, we are trying to establish whether there are circumstances in which a single owner could own both of them, which we feel would be inappropriate. Market and competition considerations are, at the moment, likely to preclude that possibility—especially given the size of the market share of Channel 3. However, as we have repeatedly said, we have to look ahead and create a Bill that will last a decade, or at least a decent period. The market is becoming more fragmented, and it is entirely possible that Channel 3's market share will drop and Channel Five's market share will not build up. In future, competition considerations may not rule out joint ownership. However, even if that were to happen, their status as public service broadcasters means that they should be owned independently, to ensure diversity among public service broadcasters. 
 It is not the fact that its market share is between 30 per cent. and 40 per cent. that makes Channel 3 important; it is the fact that it is a public service broadcaster. Were its market share to fall, we would still believe that its special status made it different from other television channels. 
 We hope that the Minister will tell us what the Government feel about potential joint ownership of Channel 3 and Channel Five. We seek assurances that the Government have no intention of allowing a single owner to own both channels.

John Greenway: I was not going to intervene, but I do so briefly because I know that my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) wants to discuss the competition issues. With his experience of trade and industry matters, he will do that much better than I can. However, when we discussed the regionality of ITV and its financial position, I suggested to the Committee that, in looking ahead, it ought to know that the trend that is presently developing in British television is for a huge, monolithic BBC on the one hand and Sky on the other—a company that is growing in status, competence and size of operation, and which has an increasing audience. Channels 3, 4 and Five are stuck in the middle, all desperately short of money.
 I am not suggesting that someone should put forward a business plan to put all three channels under one ownership, because that would not be appropriate. However, as the hon. Member for Sheffield, Hallam (Mr. Allan) and his colleagues have said on many occasions, it would be folly for the Committee, in trying to write legislation that lasts for a considerable time, to pass an amendment that prevented the coming together of Channels 3 and Five, if that is what is required to sustain those services financially in the future. 
 I make no apology for returning to the point over and again. As a Committee, given all the requirements, obligations and duties that we are placing on the commercial broadcasters, and all the limitations that we seek to place on their ability to make future changes that reflect what happens in the television marketplace and the financial world, we should keep it in mind that, sooner or later, we will have to deal with how we pay for all those obligations. 
 We should be flexible about the position of Channel 3 and Channel Five and not close down opportunities that we might need to take advantage of in future, which may involve those channels being under one ownership, or under ownership in which there are common interests within the existing 20 per cent. rule for Channel 3 that the Minister defended earlier. 
 I will refer later to discussions on the Broadcasting Act 1990. If there is one thing that we should learn from deliberations on that and the Broadcasting Act 1996, it is the need to think long term about what might happen in the television and broadcasting arena. We must ensure that legislation enables the regulators and the industry to have the flexibility that they need. The amendment would close off an important option that Channel 3 and Channel Five together might—only might—need to pursue.

Andrew Lansley: It will not surprise the Committee to hear that I believe that we should resist the amendment and the introduction of further rules that constrain the possibilities of media ownership changes in the future, an argument that my hon. Friend the Member for Ryedale (Mr. Greenway) set out very well. The Joint Committee report reinforced that argument. That Committee was not always right, but, if we are to have pre-legislative scrutiny, we should take account of what the Joint Committee said. After agreeing with the Government
''that the economic considerations relating to single ownership of ITV will be best determined by the operation of competition law, which would be significantly strengthened by the plurality test we have recommended. We also consider that matters relating to the consolidation of ITV and Channel 5 could properly be decided through competition law, strengthened by the plurality test.''
 Again, it will come as no surprise that I think that if a plurality test were added, the case for the retention of a prohibition on Channels 3 and Five being held by one owner would substantially diminish.

Nick Harvey: Does the hon. Gentleman acknowledge that the Government have not as yet said whether they accept the principle of the plurality test? Members of the Joint Committee who were quite concerned about combined ownership of Channels 3 and Five were nevertheless led by the hon. Gentleman into thinking that that would be best controlled in the way that he described. If the Government do not go down that route, some members of that Committee would look for another way.

Andrew Lansley: I am grateful to the hon. Gentleman, as what he says is entirely true. Some of us are in the awkward position of not yet being able to say what the final outcome on how competition policy will be exercised. It is curious that as a result of some aspects of the legislation we shall end up with belt and braces and a piece of string: the belt of media ownership rules, the braces of competition law, and the piece of string of the conditions and format applied. If I remember correctly, when the Government started on that track, it was not their intention to remove the prohibition on holding Channel 3 and Channel Five licences together. That changed in the subsequent policy document. The balances are not easy to get right. The more one rests on a current judgment of what the proper balance is, the more one is likely simply to get things wrong, because one is resting on the considerations of the present, rather than putting in legislation that has a proper framework for the future.
 I would quite understand if the hon. Members for Sheffield, Hallam and for North Devon were to say, ''But we should leave this rule there and let Ofcom take its first review of media ownership rules, look at the changing scene and bring forward recommendations if it wishes to''. That is another way of proceeding. My strong personal preference is not to put in ex ante rules, but to have a proper competition test, properly buttressed, and I continue to operate on the basis that we might yet persuade the Government to have one. If we do not do that here, it might happen in another place. When that happens, belt, braces and a piece of string will be the last thing we want. The combination of the prohibition in relation to Channel 3 and Channel Five will be a constraint that we do not need. 
 My hon. Friend the Member for Maldon and East Chelmsford referred, if I remember correctly, to the increase in the proportion of television viewing of non-public service broadcasters on satellite, digital, terrestrial and so on. I think that public service broadcasters—in particular, commercial broadcasters—must look to their laurels in relation 
 to the competition for audience share that they are getting not only from the BBC, which is pretty tough for them, but from other commercial broadcasters not on the analogue platform. Before too long, it will be only by the benefits of bringing Channels 3 and Five together in some way or having some form of cross-marketing and cross-promotion between those channels—perhaps some form of inter-interconnected ownership that might be subjected to merge control, but with proper conditions—that those broadcasters can proceed. We do not need to debate that for too long, because the market circumstances might dictate matters as time goes on. However, I would rather see the market circumstances for the competition test than a further ex ante rule of the kind that the hon. Member for Sheffield, Hallam proposes.

Kim Howells: The amendment would prevent any one person from holding both a Channel 3 and a Channel Five licence, and I shall explain why we oppose it. I congratulate the hon. Member for South Cambridgeshire on his use of the simile about keeping one's trousers up. I notice that he did not mention rubber bands; that would be stretching it.
 There is a rule that prevents joint ownership of a national Channel 3 licence and a Channel Five licence. However, there is no rule preventing joint ownership of ITV regional licences and Channel Five. In other words, joint ownership is now possible, and the amendment would have the effect of introducing new restrictions on ownership. Like past Administrations, we are not overly concerned with the possibility of one person owning Channel Five and Channel 3. Channel Five has a relatively small audience, does not reach all the British population, and has fewer public service commitments than ITV. The existence of the BBC and Channel 4 ensures that there are at least three separately controlled free-to-air public service TV broadcasters; in addition, there is the expanding range of digital channels. Certainly, we will not be short of competition. 
 As with joint ownership of Channel 3, we believe that joint ownership of Channel 3 and Channel Five can be left to the competition authorities. That was essentially the view of the Joint Committee, too. After all, I remember the representations that Channel Five made to us—and, I assume, the Joint Committee—about the need for new sources of investment. The hon. Member for Ryedale spoke, quite properly, about the dip in advertising revenue that affected many companies. Channel Five is a young TV channel with dynamic management and some very good ideas that have proved popular. It is expanding quickly, and clearly needs investment. 
 A Channel Five owned by Channel 3—and this will be real heresy to the hon. Member for Sheffield, Hallam—could end up being better resourced, and capable of producing even better programmes and competing more effectively with the BBC. I am all for that. A better-resourced company might also be able to shoulder more public service broadcasting obligations, although some members of the Committee might not be so keen on that. The licensing regime would allow Ofcom to consider introducing more demanding targets for original or 
 regional productions. I hope that the hon. Gentleman will bear that in mind. 
 The Secretary of State would also be able to introduce, by order, nominated news provider obligations or increase the quota for independent productions, and that must be good for what the hon. Member for Sheffield, Hallam is fond of calling the ecology of British broadcasting. I understand the hon. Gentleman's concerns, but I hope that what I have said will go some way towards convincing him that they are unfounded. I hope that he will withdraw the amendment.

Graham Allen: I am sad that the Minister suggests that I would think it heresy if there were decent investment in Channel 3 and Channel Five. One intention behind of the amendment was to guarantee precisely that. We thought that, by keeping the channels separate, there would be two distinct investors, one for Channel 3 and one for Channel Five. Our concern is that, if one bought the other, it would reduce, not increase, the opportunity for new investment. The logic was that the amendment would allow both channels to do well. We did not want to do them down.
 I am sure that we will have a chance to come back to the subject later, either under the Bill or—assuming that the legislation lasts as long as the previous two Bills—in about six years, when a new Bill is introduced. We remain concerned about the separate investment channel streams for Channel 3 and Channel Five. However, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

John Whittingdale: I beg to move amendment No. 472, in
schedule 14, page 412, line 37, leave out sub-sub-paragraph (e).

Peter Atkinson: With this it will be convenient to discuss the following amendments: No. 473, in
schedule 14, page 412, line 39, leave out sub-sub-paragraph (f).
 No. 474, in 
schedule 14, page 414, line 38, leave out sub-paragraph (4).

John Whittingdale: Amendments Nos. 472 to 474 deal with the holding of local sound broadcasting licences. You will perhaps rule that we will not have a stand part debate on the clause, Mr. Atkinson. This may be a suitable moment to stray beyond the amendment and say that the ownership rules governing the sound broadcasting licences caused some anxiety in the radio industry. The Government made a late, but welcome, move before the measure's final publication when they decided not to proceed with the three-plus-one rule. Had they retained the proposal to enforce that rule for radio ownership, we would strongly have resisted it in Committee.
 It is important to separate ownership and content in the debates about ownership. We discussed content at length in earlier sittings; it is often the case, especially in radio, that enforcing different ownership leads to less programme choice than allowing one owner to hold two licences. For example, in London, two stations, Capital FM and Heart FM, provide similar 
 programmes. If Capital had had two franchises, there would have been no point in its duplicating the programmes on the first station. 
 I welcome the Government's acceptance that three plus one would have been unduly restrictive and their move to two plus one. I would get rid of two plus one and leave matters to be dealt with by competition legislation but we should not be too purist about such things. 
 The amendments relate to cross-media ownership, which becomes as important in respect of local radio stations as it does when dealing with national broadcasts. Concerns might arise if, for example, a local newspaper group also gained control of the local radio station. However, the issue should be dealt with under the competition legislation. We already have robust legislation and the amendment tabled by my hon. Friend the Member for South Cambridgeshire, which we have yet to debate, would strengthen that legislation and the competition regime, and we shall urge the Government to accept it. 
 That competition regime is the right way to deal with local sound broadcasting licences as well as the ownership of national television licences. I shall not repeat my earlier arguments on the subject, which also apply to the amendments.

Eric Joyce: I follow the hon. Member for Maldon and East Chelmsford in asking the Minister to clarify the two-plus-one rule. On one hand, it seems good sense but in Scotland, the Scottish Media Group is concerned that there might be constraints on its ability, as a small, independent organisation, effectively to consolidate and compete against other interests if, for example, Granada and Carlton were to emerge.
 I am worried that the proposal might make it more difficult for Scottish Media Group to find ways of consolidating. It would be ironic if Capital or Heart could buy radio interests in Scotland but Scottish Media Group could not. I should be grateful if the Minister would say whether the rule will be interpreted in a way that would constrain the group.

Michael Fabricant: I support the amendment. There are 20 commercial radio groupings at present, some of which, such as Capital and GWR, are quite large. However, there are smaller ones such as Tindle Radio, which was mentioned in previous sittings. The mere ability to have two-plus-one radio station groupings does not necessarily mean that there will be such groupings. Ironically, I suspect that it would be the Tindle Radios of the world that might wish to hang on to their independence.
 I have often thought that there is duplication between the legislation in broadcasting Acts and that provided for the Competition Commission. As we approach a period in which an increasing number of radio stations will be available, albeit on the digital audio spectrum, I believe that that should be controlled by the Department of Trade and Industry rather than through this Bill. 
 We have spoken previously about Clear Channel. Broadcasters in the industry fear that if Clear Channel were to take over 50 per cent. or more of radio stations, that would limit broadcasting opportunities in the UK. However, as my hon. Friend the Member for South Cambridgeshire has pointed out, in Australia, which arguably has a culture that is more similar to ours than that of the USA, that sort of format has not worked. Clear Channel found that it had to have local people presenting programmes on local radio stations, because otherwise the audience did not listen. The market dictates whether a radio station will be successful, and in commercial radio that market determines whether the company will be financially successful. 
 I wear a slightly pink shirt and am slightly pink at the edges—

Chris Bryant: And pink in the face.

Michael Fabricant: And pink in the face, as the hon. Member for Rhondda (Mr. Bryant) helpfully points out. I do not believe that the market should always be free to determine the future of various markets. In this instance, there is sufficient flexibility in existing competition law for that law to prevail. [Interruption.]

Kim Howells: I had expected the hon. Member for Lichfield (Michael Fabricant) to speak for about a quarter of an hour, because I know that he is very interested in this area.
 As the hon. Member for Maldon and East Chelmsford told us, after publication of the draft Bill we engaged in long and productive consultation on proposals for local radio ownership. We concluded that further deregulation was both appropriate and desirable. A draft of our plans for local radio has been published, and an order will be ready after the Bill has completed its passage into legislation. We are now in the final stages of consulting on the detailed drafting. 
 I will briefly describe the principles of that order for the information of the Committee. We propose to set a limit of 55 per cent. on ownership of any one radio market, to achieve a two plus one result—that is, that there should be at least two radio stations plus the BBC in any one market. That is based on a system of points attributed to services that overlap with each other to a greater or lesser extent. 
 The position then becomes more complicated. That 55 per cent. limit means that no individual person may hold a licence that shares 50 per cent. or more of its audience with two other licences that he holds, if that would mean that his licences accounted for more than 55 per cent. of all the points attributable to all the licences in the area. 
 We remain convinced that local newspapers and regional television companies must be subject to slightly tighter limits on the ownership of radio stations in the same area. A 45 per cent. limit will therefore apply to such cross-media owners. 
 We have removed most of the ownership rules in areas where there are only one or two local analogue radio licences. However, we are not prepared to accept local monopolies. An existing ownership rule will 
 prevent anyone from controlling a regional ITV licence and more than 20 per cent. of the local or regional newspaper market in that ITV region. That should prevent any monopoly of regional newspapers and TV in major cities. 
 We will also impose a new rule to prevent ownership of a local radio station by any company that owns 50 per cent. or more of the local newspaper market in the coverage area of the local radio station and the relevant regional ITV licence. This will mean that even in smaller or less populated areas, where the 20 per cent. rule might still allow all regional TV and newspapers in those areas to be joint-owned, there will be at least two separate commercial media owners in addition to the BBC. 
 To my hon. Friend the Member for Falkirk, West (Mr. Joyce), I can answer yes. Rules relating to licences for local sound broadcasting and local digital sound programme service licences will be replaced by new rules, as outlined in part 3 of schedule 14. The rules are based on the number of points in an area, allocated according to the degree of overlap between stations. The details are set out in a draft order, a copy of which has been placed in the Library. 
 Under existing rules, TV licencees are unable to hold local radio licences in their licence area. The order, when approved, will allow them to hold such licences, and they will be subject to a maximum of 45 per cent. of the points in the area. That is enough to guarantee the presence of three separate local media owners in all reasonable-sized markets. The region of which my hon. Friend spoke is certainly one of those. 
 In addition, an ITV licencee will not be able to hold a licence where it also owns 50 per cent. or more of the local newspaper market in the coverage area of the local radio station. That will prevent local monopolies and will mean that, even in small or less-populated areas, there will be at least two separate commercial media owners plus the BBC. 
 To prevent concentration of ownership of local digital sound programme services, we have set a limit on the number of programme services that can be provided by a person on any local radio multiplex. The limit is 55 per cent. of the total number of programme services on the multiplex in question. Notwithstanding that limit, however, any person will always be able to provide a minimum of four programme services on a local multiplex. 
 Let me turn to joint ownership between national newspapers and radio. Our current draft of the Media Ownership (Local Radio) Order 2003 is not concerned with national newspaper ownership. That is because we judge that national newspapers are not local media operators and should therefore be subject to the same radio ownership restrictions as any other media owner. 
 Where a national newspaper company owns a local paper, it will be subject to the stricter limits applied to cross-media owners. The new rules under the draft radio order will ensure that at least two other companies provide local services, which will maintain a plural voice at local level.

Michael Fabricant: This is not really a probing question, but I invite the Minister to acknowledge that when a national newspaper group owns local newspapers, they often have different editorial policies. I give for example Trinity Mirror, which if not Blairite is certainly left-wing. Local papers that it owns may not take the same stance. I want the Minister to explore a little not the Blairite issue, but the issue of whether the ownership of local papers by national papers maintains a monopoly or duopoly.

Kim Howells: I have no difficulty with that. The hon. Gentleman is right: editorial lines and approaches to news can vary dramatically across a group. At the moment, the Daily Mirror looks like the official Opposition, and he should read it occasionally because it is extraordinary.
 The issue of local newspaper owners who hold local radio licences should continue to be looked at because the broadcasting industry changes. As I have stated previously, it is important to have the flexibility quickly to respond to changes in the broadcasting market. The Bill provides for regular assessment of the ownership rules, which is important because it has the future-proofing about which we have been talking in Committee. Clause 377 will make all media ownership rules subject to regular review by Ofcom, which will make recommendations to the Secretary of State setting out the changes that should be made to the existing regime in response to changing market conditions. 
 On amendment No. 474, the power to include definitions in any order made under the schedule is a vital element of the order-making powers for sound programme services. Allowing flexibility around definitions as the market changes will not make the order-making process less rigid, which is the thinking behind the draft order for local radio ownership. We have consulted at length with all the stakeholders, and the new rules have wide support. On that basis, I hope that the hon. Gentleman will consider withdrawing the amendment.

John Whittingdale: I am glad that the Minister has had an opportunity to set out the new structure for radio-ownership rules, which will be valuable for those observing proceedings. We welcome the new structure, which is a step in the right direction. Given that we are making progress, I do not want to be churlish and press my amendment. I suspect that further liberalisation in that area, which we may revisit, will be necessary in due course. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

John Whittingdale: I beg to move amendment No. 478, in
schedule 14, page 416, line 33, leave out subparagraph (1).
 This is a probing amendment. It is a taster for the debate, which we will have next week, on Ofcom's role in questions relating to the ownership of newspapers. It would leave out paragraph 15(1), which requires the Secretary of State to consult Ofcom before making an order under the schedule. We want to omit that provision because we will argue that Ofcom should not be involved in advising the Secretary of State how to 
 exercise powers in relation to newspapers. That is a matter for the competition authorities, and it is one in which Ofcom will not have great expertise because its expertise lies in broadcasting.

Andrew Lansley: My hon. Friend may be going on to explain this, but the amendment's effect would be wider because it would relate to all orders made under the schedule. That would presumably include orders made by the Secretary of State to amend part 1 of the schedule, which relates to television, as well as part 2 of the schedule, which relates to radio, rather than orders relating only to the relationship between newspapers and radio.

John Whittingdale: I suspect that my hon. Friend is absolutely right, which is why I described the amendment as ''probing''. Our specific concerns are cross-media ownership and Ofcom's role in considering matters connected with newspapers. I do not want to press the amendment, but, perhaps in anticipation of a future debate, it would be useful for the Minister to say a few words on why Ofcom should have a role in that specific aspect of the schedule.

Andrew Lansley: I asked my hon. Friend that question to see whether he was going to probe the other issue. He has not done so, so I will. We shall come in due course to clause 377, which relates to Ofcom undertaking a review of the ownership rules, including some of those contained in schedule 14. Clause 377(2)(b) refers to
''the provision made by or under Schedule 14 to this Act''.
 Therefore, the Secretary of State will receive Ofcom's recommendations. 
 As I understand it—the Minister will tell me if I am wrong—paragraph 15 in part 4 of the schedule allows the Secretary of State to make orders, including orders 
''giving effect to recommendations made by OFCOM''
 in respect of 
''a review under section 377''.
 As I recall it, the Joint Committee did not see that part of the schedule in that form, but rested on the expectation that Ofcom, with its knowledge of the media market, would make substantive recommendations to the Secretary of State. If the Secretary of State wants to make changes of that kind, relating to the Channel 3 licences, the 20 per cent. rule in relation to national newspaper groups purchasing Channel 3 licences and so on, she does not need an independent regulator between her and media owners. She can simply go ahead. That might be good for her, but it might also be bad, because she may find it useful to have Ofcom standing between her and the ability to make media ownership rules. I thought that we were trying as far as possible to get out of politically determined media ownership rules that interfere with the marketplace and leave regulation to Ofcom. 
 Am I right in believing that the Secretary of State could change the rules in ways that are not recommended by Ofcom, having merely consulted Ofcom before doing so? If so, is that wise? I suspect that it would be wiser to provide that she acts only on Ofcom's recommendations.

Kim Howells: The Bill provides that the Secretary of State must consult Ofcom before making an order that changes the rules on media ownership. That consultation must take place unless the order is concerned solely, as the hon. Member for South Cambridgeshire just told us, with effecting the recommendations of a report of a media ownership review by Ofcom under clause 377—in other words, when Ofcom has made its view clear to the Secretary of State. The amendment would withdraw that requirement, which would allow the Secretary of State to lay before Parliament an order on media ownership without consulting Ofcom. That is why we oppose the amendment.
 Our proposal takes account of concerns that either the Secretary of State or Ofcom could have too much power to amend rules by legislation. The Bill gives Ofcom the responsibility of carrying out reviews under clause 377 and recommending changes, but puts the order-making powers in hands of the Secretary of State, who must consult Ofcom before exercising her powers, which must be done by the affirmative procedure. Parliament will thereby have the opportunity to scrutinise any proposed changes before they become law.

John Whittingdale: May I ask the Minister one small question? The schedule says that Ofcom must be consulted before the order is made, but there is also a procedure whereby Parliament will approve the draft order. Can the Minister confirm that consultation with Ofcom will take place before the parliamentary approval process as well as before the final making of the order?

Kim Howells: Yes, indeed. I imagine that the order will be laid, Parliament will debate it, subject to an affirmative resolution, and then the Secretary of State will see Ofcom.
 Consultation with Ofcom will be an important part of that process. It will have an in-depth knowledge of all aspects of the communications sector and will be able to take into account all relevant issues and how they interact with one another. It is right that the Secretary of State should be required to draw on Ofcom's expertise before making media ownership decisions. I hope that that clarifies the situation. We want to foster constructive relations between the Government and Ofcom, and effective communications on important policy changes are vital to that. I hope that the hon. Gentleman is reassured and will withdraw the amendment.

John Whittingdale: It was a probing amendment, so I shall not press it. I am grateful to the Minister for that clarification.

Andrew Lansley: It might be worth mentioning that I made a number of points that seemed quite important to me, but to which the Minister has thus far not responded. Let me remind him, since he is having difficulty remembering them. The point of my remarks was not to stress the desirability of consulting Ofcom; that is pretty much agreed. It was that the Secretary of State has the power to make orders outwith the recommendations of Ofcom relating to media ownership. Am I right to think that the schedule
 allows that, and if so, does the Minister really believe that that is wise? Perhaps we can discuss later whether it is wise. I do not think that it is, but the Minister has not replied to the point.

Kim Howells: I apologise to the hon. Gentleman. The short answer is yes—at least, my brief says so—schedule 14 allows the Secretary of State to amend all media ownership rules after having consulted Ofcom, but we anticipate that the Secretary of State will normally respond to a report or recommendations from Ofcom. I am sure that the hon. Gentleman will be reassured by the fact that Parliament will still have the opportunity to scrutinise any proposed changes before they become law. That is the bottom line.

John Whittingdale: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Schedule 14 agreed to.

Clause 338 - Restrictions relating to nominated news providers

John Greenway: I beg to move amendment No. 44, in
clause 338, page 288, line 24, leave out subsections (1) and (2) and insert— 
 '(1) Subsection (9) of section 32 of the 1990 Act (limits on participation in nominated news providers) shall cease to have effect.'

Peter Atkinson: With this it will be convenient to discuss the following:
 Amendment No. 257, in 
clause 338, page 288, line 25, leave out '40 per cent.' and insert '60 per cent.'.
 Amendment No. 258, in 
clause 338, page 288, line 42, at end insert— 
 '(4A) It shall be the duty of OFCOM to carry out a review of the operation of the provisions of subsections (8) to (11) of section 32 of the 1990 Act no later than 12 months after the commencement of this section.'.
 Amendment No. 45, in 
schedule 19, page 531, line 7, at end insert— 
 'Section 32(9).'.

John Greenway: Clause 338 relates to one of the most important issues that we are likely to discuss this afternoon. A constant feature of our deliberations has been the frequency with which we have returned to the debates that took place on the Broadcasting Acts of 1996 and 1990. I am sure that it will be fascinating for students of these matters to note that the arguments have barely changed over the last seven or 13 years, depending on which proceedings are being discussed.
 On 15 February 1990, which was my birthday—unfortunately, we will be finished in Committee before the next one—we discussed how far the 1990 Bill affected ownership of a nominated news provider for ITV—for Channel 3. In fact, the 1990 Act created the concept of the nominated news provider and imposed restrictions on ownership. No ITV company—in those days, there were still 15 of them—could own more than 20 per cent. of the ITN news company. Interestingly, the author of that proposal was 
 Alastair Burnet. He convinced Lady Thatcher that that was a good idea, so this was one of the few issues on which the Government of the day were not prepared even to consider changing their mind. In many respects that Bill was significantly improved in Committee. Sadly, that is not the case for this Bill. I strongly opposed the ownership restriction, but accepted the benefits that might accrue, certainly in the short term, from having a nominated news provider, which would provide greater independence for ITN. 
 Some would say that that change brought benefits through the nominated news provider system, but I do not believe that brought any tangible benefits in respect of ownership changes. The Conservative party believes, as do ITV and ITN, that it is time to reconsider and move on. The bidding process is perverse. ITN has to bid against another news provider. ITV ends up paying a lower price, and ITN has less money in its coffers for the provision of its service. I am well aware that ITV shareholders are a bit hard pressed at the moment. Their shares have gone down, particularly because of problems with ONdigital, which became ITVDigital. I cannot see why it should be the Government's business to take an interest in a measure such as that proposed here, particularly when there is no comparable requirement on the BBC, which entirely owns its own news service. 
 I oppose the concept of the change of ownership rules. I could not see why the ITV companies could not continue to own all of the news service at ITN. In the debate on my birthday, I was supported by the right hon. Member for Edinburgh, Central (Mr. Darling)—now Secretary of State for Transport—by Lord Corbett, by the hon. Member for West Ham (Mr. Banks), by Lord Elis-Thomas on behalf of the Welsh Nationalists and by Lord Maclennan on behalf of the Liberal Democrats. At one point, and I treasure this, Robert Maclennan said that I spoke ''with great force''.

Kim Howells: Would the hon. Gentleman agree that they were being nice to him because it was his birthday?

John Greenway: They certainly were, although it was not my amendment. It was proposed by Lord Corbett, and supported by the current Secretary of State for Transport. Like this Committee, that Committee was good-natured and had a good atmosphere. The only two people who spoke in support of the ownership proposals were Mr. David Mellor and Mrs. Edwina Currie. I therefore ask hon. Members to reflect on the company they would be in if they chose to resist the amendment this afternoon.

John Robertson: When the hon. Gentleman quoted Robert Maclennan, was he sure that there was not a misprint? Was it perhaps an ''a'' rather than an ''o''?

John Greenway: No it was definitely ''force''. Indeed, Lord Maclennan reiterated all the arguments that I deployed. I do not want to go over all the arguments again, but I will touch on those matters when I speak
 formally to the amendments. I oppose this for three reasons: it would undermine quality, it would reduce investment in the ITN news service and there is a constitutional issue that has never been answered. Prior to 1990, the Independent Broadcasting Authority was the broadcaster and therefore the publisher of programmes. The old IBA was responsible if something went wrong. The 1990 Act made the Channel 3 licensees the publisher and broadcaster, and therefore responsible for whatever they broadcast. However, they were given only a 49 per cent. maximum stake in the ownership of the company whose news programmes they were going to have to publish.
 Let us imagine the furore that there would be if the Minister spent tomorrow in his office instead of going back to Wales—looking at the snow outside, he might not get there and I might not get to Yorkshire—and telephoned Mr. Greg Dyke to say that we had decided to impose on the BBC's news service the kind of restrictions under which ITV has to work. It would be nonsense. 
 Ministers have acknowledged that there is a need for change. Clause 338 proposes a new collective restriction on the ITV shareholders' ownership of the nominated news provider of 40 per cent. instead of 20 per cent. In a Bill that proposes to sweep away ownership provisions in almost all other areas, that is both anomalous and unnecessary. Amendments Nos. 44 and 257 would either lift all ownership restrictions or allow ITV shareholders to take a controlling stake in their news provider. Amendment No. 44 would impose no limit on ownership. Amendment No. 257 would increase the 40 per cent. figure in the Bill to 60 per cent. so that if there were a single ITV company, which is on the horizon, it would at least have a 60 per cent. majority shareholding. 
 The proposed legislation is anomalous for two reasons. First, I am aware of no other major broadcaster in the world that is prevented from owning its own news provider. I have referred to the fact that the BBC does—and so does Sky, the likes of TF1 in France, RTL and ARD, which are also in Europe, and NBC and CBS in the United States. Indeed, ITN was established and run successfully by the ITV companies for the first 30 years of its existence. 
 Secondly, the Government argue that raising the 20 per cent. ownership bar to 40 per cent. will encourage investment and decision making, but they appear to be alone in thinking that. Even ITN does not see it that way. The Minister referred to the excellent launch party for the ITV news channel. I am sure that he spoke to the ITV executives, who will have expressed their view that it is time to scrap such provision and to make some fundamental change. 
 In a recent article for the Westminster Media Forum publication, which has already been referred to several times, the ITN chairman, Mark Wood, suggested that not only will the new rules result in an artificially large number of shareholders around the 
 board room table, thus making strategic and investment decisions more difficult, they could also 
''undermine ITN's future commercial development, hampering the company's ability to forge new partnerships and closing off the potential to merge with other companies or for shareholders to increase their stake.''
 He goes on to say: 
''In this respect, the Bill fails to deliver the Government's objective of maintaining ITN's public policy role as a strong, alternative force in the provision of broadcast news in the UK. In fact, in the case of ITV, the rules will actually be more restrictive than the old ones as, in theory at least, under the current Act, the existing 5 ITV shareholders could each own a 20 per cent. stake in ITN''—
 notwithstanding the 49 per cent. that I have mentioned— 
''and thus own it outright.''
 The problem is that we are likely to see one ITV company. 
 Carlton and Granada's recent decision to take a controlling stake in ITN's 24-hour news channel—I have already referred to its relaunch—when other shareholders favoured closing the channel demonstrates that the ITV companies have an incentive to support ITN if given the chance. However, the new rules will prevent the same ITV companies from increasing their investment in ITN. That is not only perverse but illogical. 
 As I argued earlier, maintaining an extra layer of regulation for ITN, whether in the form of the nominated news provider system or special ownership rules is unnecessary if the rationale is simply to guarantee independence and editorial integrity on-screen.

Kim Howells: I am interested in the hon. Gentleman's argument. He will know that 10 years ago the ITV news contract was worth more than £80 million per year—that was its budget. This year it will be worth a little over £36 million. Does that worry him?

John Greenway: Yes it does, but I have already explained why that is. ITN had to compete against Sky and lower its price, otherwise the ITV companies would have had no choice but to accept the Sky offer. That is why the provision is perverse, and ITN understands that. I cannot understand the rationale behind persisting with a system that drives down the money available to ITN to invest. I am glad that the Minister intervened; now it is clear that he does not understand the argument.

Brian White: Is the hon. Gentleman saying that there should be no competition for the ITV contract?

John Greenway: There is no longer any case for competition. What is the point of it? ITV is a separate channel from the BBC, Sky and Channel 4. I doubt that Channel 4 will choose to go somewhere else because through ITN it broadcasts arguably the best news service in the country: the 7 o'clock news. If I could watch only one news broadcast, that is the one I would watch. Sadly, we are often voting at 7pm so I miss the beginning.
 As a result of competition, a commercial channel is investing less money in news than it would if it were given the freedom to do what it wanted. I could understand the argument if the ITV network were supported by public money, although the BBC, which is supported by £2.5 billion-worth of public funds, has no such restriction. So if the hon. Member for Milton Keynes, North-East (Brian White) wants to introduce competition, let him table a new clause on Report stating that the BBC will have to compete over which will be the news channel. That is why I teased the Minister in suggesting that tomorrow morning he might ring Greg Dyke and say that he has decided that that is what the policy is to be so that the BBC can be on all fours with Channel 3. It is nonsense. It is time to put this provision in the dustbin where it belongs. 
 The extra layer of regulation is unnecessary for editorial integrity on-screen, because that is already enshrined for all news services in licence obligations and the ITC programme code. ITV companies would face fines or even heavier sanctions if their commercial interests intruded in any way on the editorial content of their news programming. That is provided under existing legislation and the Bill. There is no argument about editorial integrity. 
 What ITN needs above all, like all businesses, is the security of long-term investment to enable it to grow and develop in the face of increasingly intense competition in the market for news provision. That means creating incentives for and not maintaining legislative barriers to investment. That answers the point made by the hon. Member for Milton Keynes, North-East. The reality is that the ITV companies are best placed to provide that investment and in doing so create a genuinely integrated regional, national and international force in UK news to take on the BBC and Sky at every level.

Michael Fabricant: Does my hon. Friend agree that the one bad investment decision that ITN made was the purchase of the Grays Inn road premises, which were far too big for it? If it had a much more consolidated ownership, such bad investment decisions would not be repeated.

John Greenway: I am not sure about that. Arguably, it was easier for ITN to take that decision when it had £80 million than it would have been with the £38 million that it has now. The decision was taken in the days when ITV was much more profitable and I suspect that that decision reflected that. I do not agree that ITN's headquarters at Grays Inn road are a white elephant. It has excellent studios and facilities and I always enjoy going there.
 In the event that the Government remain committed to retaining special ownership restrictions on ITN, we propose that Ofcom should be required to undertake a review of the efficacy of those provisions no later than 12 months after the Bill comes into force, which is the purpose of amendment No. 258. It mirrors the recommendation of the Joint Committee, as my hon. Friend the Member for South Cambridgeshire will know, because paragraph 255 of the Joint Committee report recommends that Ofcom should conduct an early review to determine whether the current limits are 
''the best way of ensuring that there is a strong news provider to compete with the BBC and BSkyB.''
 There is one ray of hope and one shaft of light as the snowstorm increases in intensity—that used to be what one saw on one's television screen, but thanks to digital transmission it is a thing of the past. The ray of hope is in clause 273, which we sadly could not debate because of the guillotine. The clause provides for the nominated news provider system to be scrapped in the future. That indicates that Ministers think that the present system cannot last. I would like the Minister to be more bold and decisive and to get rid of it now.

Nick Harvey: I support the amendment and I congratulate the hon. Member for Ryedale (Mr. Greenway) on making his argument with great force despite the passage of 12 years. His logic was right.
 I put value on the fact that our country has three high-quality news providers: BBC, Sky News and ITN. What is the best way of ensuring that ITN continues to thrive and provide a third news service to give the others a run for their money?

Michael Fabricant: While the hon. Gentleman is mentioning those three providers, will he pay tribute to Channel 4 news, which is a slightly separate organisation, and to CNN? Even in the United States, 40 per cent. of CNN's output comes not from Atlanta but from its operation in London. The United Kingdom is a major international news provider.

Nick Harvey: In commending ITN, I was clearly including its high-quality news products for Channel 4. CNN is a different operator altogether, although it certainly produces high-quality output.
 ITN has fallen on hard times. Its budget is smaller than it was and it has laid off many staff. It does not have an international network on the scale of that in the past and it is ailing in every sense. As we look forward, we must ask how it is best likely to recover strength. Will it be by maintaining the current ownership restrictions to take account of the Carlton-Granada merger and the periodic auction described by the hon. Member for Ryedale, or will it be better off within ITV? Would that position provide better protection? 
 The history of the regional ITV companies getting together and having one stand-alone, serious news provider was sound, but as we progress towards a single ITV, the attraction and the logic of that diminishes further. As the hon. Member for Ryedale said, ITV Channel 3 is unique by its being prevented from owning its own news provider. There must be a strong justification for maintaining such a perverse restriction, and I do not believe that there is any more. 
 We must face the fact that news gathering and news production is not profitable; it is a loss-making business. Whoever provides that service, whether for ITV or any other company, must cross-subsidise it from its other activities. If the news provider continues to be owned by a body that has to have several 
 different owners, will that be more likely to allow the provider to grow, to thrive and to attract the necessary investment; or would it be better for the cross-subsidy to come from ITV Channel 3 itself, from its other areas of activity? There are certain synergies between Reuters—one of the current shareholders—and ITN. However, having a multiplicity of ownership has not served ITN well, as nobody has been in clear command and few bold investment decisions have been taken. 
 The viewing public and the regulatory authorities should be able to apply pressure on ITV Channel 3 to supply high-quality news. Ideally, they should also be able to insist on certain levels of investment in that news. However, they will not be able to do that effectively if the owners of ITN are companies in other sectors, on which no pressure can be applied. The public and the regulatory authorities can put pressure on ITV and insist that its news is of a certain quality, duration, prominence and so on. An ability on the part of Ofcom to lean on ITV to ensure that its news is of high quality would be a more effective lever than that available if ITN were owned by a variety of companies, some of which Ofcom had no control over whatever. 
 The hon. Member for Ryedale was challenged by the hon. Member for Milton Keynes, North-East about periodic auctions. There seems to be no good reason for those auctions. As has been pointed out, neither the BBC nor Sky has to go through such an exercise. Auctions can be downright damaging. Mischief-making consortiums can be formed to participate in the auction and drive down the price. We have seen that happen; the product and scale of the operation can be severely damaged as a result. If a mischief-making consortium then finds itself competing with ITN for other business, it will have succeeded in fundamentally weakening its competitor. Such activity serves no useful purpose. A time might come—we saw a similar thing last time round in respect of Sky—when a consortium wins the bid. We would then have killed off the third news provider. I do not know how ITN could survive significantly if it were covering only Channel 4 and Channel Five. 
 I think that the Government half accept that the arrangement cannot endure, because they have included sunset provisions. The arrangement is already doing serious harm, and ITN has already been seriously damaged by the reduction in the value of the Channel 3 contract. The whole mad system ought to be ended now. Parliament is having a considered look at the entire communications sector and it would be better to kill off all such arrangements now, rather than wait for that to be done later under the sunset provisions.

John Whittingdale: I shall not repeat the excellent speech of my hon. Friend the Member for Ryedale, in which he put the case powerfully. I want to make some small observations.
 We referred briefly to the nominated news provider requirements and to the fact that, had we had a chance to debate them earlier, we would have resisted them for some of the reasons that my hon. Friend described. Part of the justification for them was to introduce a 
 little competition, but that has failed because the three commercial channels all use the same news provider. So, there is not much competition. As the Minister rightly pointed out, the requirements have driven down the price that ITN receives for the contract. 
 Although it is always good to have a spur for efficiency, the fact that the contract is worth half what it was 10 years ago is a demonstration of the problems that have been caused by depriving ITN of investment. The Government say that the Bill liberalises the rules—and, in theory, the rules are being liberalised. The ownership limit is being increased from 20 per cent. to 40 per cent. However, if the merger goes through, there will be no progress, because the ITV company will have the maximum allowable stake. One person said to me recently that a 40 per cent. limit is the worst of all possible worlds. It does not give any incentive to invest in ITN seriously, which is what it desperately needs. 
 Having spoken to people in broadcasting, I know that ITN believes that the clause will be damaging to its future development. ITV is opposed to it, because it prevents it from bringing ITN in-house, should it wish to do so. It will create a strong competitor to BBC and BSkyB. The BBC has no objection to that happening. I understand that Channel 4 has no objection. I have yet to find anyone who thinks that the Government are right.

Kim Howells: The ITC.

John Whittingdale: That is the Government's body of course. I therefore find it difficult to understand why the Government insist on pursuing the matter. I hope that the Minister will listen to the force of the argument made by my hon. Friend and the hon. Member for North Devon.

Kim Howells: We have had an interesting debate. At present, the Broadcasting Act 1990 prevents one company from owning more than 20 per cent. of the ITV nominated news provider. Clause 338 makes provision for that ownership limit to be raised to 40 per cent. Amendments Nos. 44 and 45 would remove the limits and allow a person to own the nominated news provider outright. Amendment 257, on the other hand, proposes that the limit should be raised to 60 per cent. I shall explain why we need limits and why we believe that the 40 per cent. figure is right.
 During consultation on media ownership we were persuaded that the current 20 per cent. ownership rule for the nominated news provider inhibits dynamic investment and decisive management. At the same time, however, TV is an important source of information and opinion. Viewers have a high awareness of its impartiality. People regard TV news as particularly trustworthy and many rely on it as their main source of information. 
 A recent poll found that 59 per cent. of people identified television as their primary media source for trustworthy information. Therefore, we must be sure that most people receive high quality and editorially independent views from free-to-air television. ITV news, as the main competitor of the BBC, must provide that. A 40 per cent. restriction could reduce the number of shareholders from five to three. In 
 addition, Channel 3 licensees will not be allowed to control more than a 40 per cent. share, whether alone or in combination. That will ensure that the service is independent of the licensees, that it is unaffected by any of their commercial concerns, and that it will not force any of the existing shareholders to disinvest. It will also provide ITN's ownership and decision-making structure with a greater degree of flexibility and dynamism than it enjoys at the moment. 
 Amendment No. 257 proposes a limit of 60 per cent., but that would still not allow Carlton and Granada to own ITN between them. The amendment's provisions would still be subject to the rule of subsection (2), which states that Channel 3 licensees will not be allowed to control more than a 60 per cent. share, whether alone or in combination. The amendment would allow two or three owners, rather than three or four, depending in each case on how many ITV companies have a holding. It is an example of salami slicing: if 40 per cent. is allowed, why not 60 per cent.; and if 60 per cent., why not 75 per cent.? That would be a matter of judgment. We think, however, that increasing the ownership limit to 40 per cent. is about right and that it strikes a reasonable balance between responding to calls for more relaxed ownership rules and ensuring the necessary independence of the nominated news provider. 
 If the market changes—this is an important point—and there is sufficient competition to ensure plurality for viewers, there will be the flexibility to alter the ownership rules. As we said in the Communications White Paper, 
''we expect that the market will eventually ensure that the BBC has sufficient competition for the nominated news provider no longer to be necessary.''
 Subsection (3) makes provision for the Secretary of State, in consultation with Ofcom, to repeal or modify the limit on the ownership of the nominated news provider. That will mean that, if the environment changes, we will have the flexibility to change the restrictions on ownership of the nominated news provider. 
 Amendment 258 would require Ofcom to review the limits on Channel 3 nominated news provider arrangements—which are set out under subsections (8) to (11) of section 32 of the 1990 Act—within 12 months of the commencement of the provision. Clause 377 already requires that Ofcom review all media ownership rules within three years of commencement. That review will include recommendations relating to news provision, and there is nothing to prevent Ofcom conducting a review sooner that that. 
 Ofcom must under clause 377 produce a report on each review for the Secretary of State. Reports will include recommendations on whether the Secretary of State should exercise her powers to modify, repeal or revoke rules in enactments by secondary legislation. Ofcom must publish every report and it must ensure that they are brought to the attention of those persons whom it considers to be likely to be affected by them. 
 Ofcom may also, if it considers it appropriate, carry out and publish results of reviews in addition to the 
 regular ones required under clause 377. It may also make recommendations to the Secretary of State on changes to provisions. Under the new rules, the Secretary of State may if she considers it appropriate also initiate consultations with Ofcom on the ownership limit of the nominated news provider. 
 We consider that the arrangements will be sufficient to guarantee that news provider provisions are re-examined to ensure their continued relevance. The Bill provides a long-stop requirement for a review every three years. Beyond that period, we see no benefit to requiring Ofcom to review the nominated news provider within a prescribed timetable. It is for Ofcom to determine its own priorities and the appropriate timing for reviews. If Ofcom were persuaded by ITV companies that an alternative ownership structure would safeguard the quality, impartiality and investment in news on ITV, changes may be made sooner rather than later. 
 I hope that the hon. Member for Ryedale is convinced that the changes are necessary and I therefore ask him to withdraw the amendment.

John Greenway: Towards the end of his remarks, the Minister gave a reasonably optimistic view of the potential for review and change, such as to make amendment No. 258 unnecessary. However, we think that a review in the short term would make sense. There is clearly not a meeting of minds on the issue of continuing with the nominated news provider system. I cannot see the logic behind the argument that it is okay to go up from 20 per cent. to 40 per cent. but not okay to go up to 60 per cent. Rather than continuing to argue about amendment No. 44, we will press it to a Division in order to register our view.
 Question put, That the amendment be made:—
The Committee divided: Ayes 8, Noes 11.

Question accordingly negatived. 
 Clause 338 ordered to stand part of the Bill.

Clause 339 - Changes of control of Channel 3 services

Kim Howells: I beg to move amendment No. 550, in
clause 339, page 289, line 3, leave out 'regional'.

Peter Atkinson: With this it will be convenient to take the following:
 Government amendments Nos. 551 to 567. 
 Government new clause 39—Changes of control of Channel 5. 
 Government new clause 40—Action following review under s.[Changes of control of Channel 5].

Kim Howells: The amendments are another key component in the implementation of the recommendations of the Independent Television Commission's review of the programme supply market.
 As hon. Members will know, the Government asked the ITC to undertake the review in response to concerns expressed during consultation on the draft Bill about the overall economic health of the programme supply market. We wanted to establish the facts, including the likely impact of changes to the media ownership rules, and consider ways in which the market might operate more efficiently and a strong UK production base be encouraged. The ITC's report was published in November and has commanded respect from the whole industry. 
 We have already heard that the ITC's review concluded that the Government's proposals for reducing barriers to international investment and ownership could lead to a number of benefits, including increased investment for programming, access to new management and expertise and talent, new approaches to commissioning, and access to critical mass and distribution. The ITC did, however, recommend that we introduce a range of new measures as an insurance policy against any risk of an adverse impact on UK programming. 
 We listened to the ITC and acted on its recommendations. We have already considered changes to provisions relating to independent production and regional production. The amendments will implement another ITC proposal, which is that clauses 339 and 340, which require Ofcom to undertake a review of the change of ownership of Channel 3, should be strengthened and extended to cover Channel Five. 
 Amendments Nos. 550, 551 and 562 extend the scope of clause 339 to apply the change of control provisions not only to a regional Channel 3 service but to a national one. 
 Amendment No. 553 extends Ofcom's duty to review the effect on regional programming in the event of a change of control of Channel 3 to cover regional production, original productions and news and current affairs programmes. Amendment No. 559 makes special provision in the case of a review of a national Channel 3 service. 
 Clauses 339 and 340 allow Ofcom to vary licence conditions as a result of their review. Amendment No. 565 allows Ofcom, when doing so, to take into account the performance of the licence holder throughout the 12 months immediately before the date of the relevant change of control instead of in a three-month period during the previous 12 months. That will ensure that a new owner of the Channel 3 service cannot run it down. Where the old owner was performing in excess of the minimum licence requirements, the new owner will not be able to retreat from that position. For the 
 new owner, the baseline will be raised from what it was in the licence to what the previous licence holder actually produced throughout the 12 months before the licence changed hands. 
 Amendments Nos. 552 and 564 are consequential and effect the substantive changes made by amendments Nos. 553 and 559. Amendments Nos. 554 to 558 are minor drafting changes to clause 339. Amendments Nos. 566 and 567 are similarly small amendments to clause 341 to ensure consistency of drafting. 
 New clauses 39 and 40 require Ofcom to undertake a similar review to that provided for in relation to Channel 3 in clauses 339 and 340 in the case of a change of control over Channel Five, and provide the same power to make variations in the licence. The provisions, and the other amendments tabled as a result of the ITC's review, are designed to help ensure that the United Kingdom has a healthy programme supply market, able to deliver a wide range of high-quality programmes for the home audience and better able to compete in the global market.

John Whittingdale: I, too, admire the work of ITC in carrying out its recent review of the programme supply market.
 I shall concentrate on new clauses 39 and 40, which appeared late in the day. That had less to do with implementing the recommendations and more to do with craven surrender to the lobbyists. I draw the Minister's attention to the report in The Guardian on the new clauses, which states: 
''In an effort to pre-empt a revolt in the House of Lords, new clauses will give the government and . . . Ofcom an influence over Channel 5's programming if the broadcaster is sold''.
 This morning, the Minister expressed admiration for Channel Five's efforts since being established, but it is still a fairly small and weak broadcaster. It is not making money, and it does not have a very large share of the market. I hope it will grow; we have been discussing the possibility that it might do so in time, but it is still a fragile flower.

Kim Howells: Does the hon. Gentleman agree that Channel Five is in a far better state than AOL/Time Warner?

John Whittingdale: That may be true, certainly in terms of the scale of losses. That said, the Government cannot do very much about AOL/Time Warner, but they can help Channel Five.
 What really disturbs me about new clauses 39 and 40, and similar clauses that cover Channel 3, is the confusion in trying to determine the quality of content and linking it with ownership. The Minister, slightly to my surprise, was quite open in saying that the purpose of the new clause was to raise the threshold in the event of a change of ownership. He is saying that it is all right for an existing owner to cut back on production outside the M25 area as long as it is still above the minimum. It would be fine for an existing owner, who might be achieving 30 per cent., to cut back to 25 per cent., but if there is a change of ownership, the threshold goes up to its level when the change of ownership takes place. 
 It is not clear why a new owner should have to deal with a completely different licensing requirement to the existing owner. If the Minister believes it necessary to amend the terms of the licence, that should be possible; it should not necessarily happen just because the ownership changes. The owner should inherit the terms of the existing licence and should not suddenly be subjected to completely new terms. That is what I object to in new clauses 39 and 40, which will impact more seriously on Channel Five where there could be a change of ownership. There is a fear that poor old Channel Five may be subject to more and more regulatory burden without gaining a new owner. Therefore we need to ensure that we are not making life more difficult for what is still a struggling channel.

Kim Howells: I thank the hon. Member for Maldon and East Chelmsford for his observations. I do not agree with them, but I would not wish to burden Channel Five with more regulations than it already has. I disagree with him that it is a fragile, suffering creature; it looks like one of our brightest stars.

John Whittingdale: It is not making any money.

Kim Howells: Very few companies in this sector are making money at the moment, as he knows—except the BBC. I would not want to talk down Channel Five, and I am sure the hon. Gentleman would not either. It holds great promise and will offer increasing competition to the established channels.
 Amendment agreed to. 
 Amendments made: No. 551, in 
clause 339, page 289, line 13, leave out 'regional'.
 No. 552, in 
clause 339, page 289, line 19, leave out '(4) and' and insert '(3A) to'.
 No. 553, in 
clause 339, page 289, line 21, at end insert— 
 '(3A) The matters mentioned in this subsection are— 
 (a) the extent to which time available for broadcasting programmes included in the service is allocated to programmes of each of the following descriptions— 
 (i) original productions; 
 (ii) news programmes; and 
 (iii) current affairs programmes; 
 (b) the extent to which programmes of each of those descriptions that are included in the service are broadcast at peak viewing times. 
 (3B) The matters mentioned in this subsection are— 
 (a) the extent to which Channel 3 programmes made in the United Kingdom that are included in the service are programmes made outside the M25 area; 
 (b) the range of Channel 3 programmes made in the United Kingdom outside that area that are included in the service; 
 (c) the extent to which the expenditure of the provider of the service on Channel 3 programmes is referable to programme production at different production centres outside the M25 area; 
 (d) the range of different such production centres to which that expenditure is referable.'.
 No. 554, in 
clause 339, page 289, line 23, leave out 'or' and insert 'and'.
 No. 555, in 
clause 339, page 289, line 24, leave out 'or' and insert 'and'.
 No. 556, in 
clause 339, page 289, line 25, leave out 'or'.
 No. 557, in 
clause 339, page 289, line 26, leave out 'or' and insert 'and'.
 No. 558, in 
clause 339, page 289, line 32, leave out 'or' and insert 'and'.
 No. 559, in 
clause 339, page 289, line 42, at end insert— 
 '(5A) In relation to a national Channel 3 service, subsections (3) to (5) have effect as if— 
 (a) subsection (3B) applied only where the service is subject to conditions imposed by virtue of a decision of OFCOM under section 276(2) or OFCOM otherwise consider, having regard to the nature of the service, that it is appropriate to consider the matters mentioned in that subsection; 
 (b) references to regional programmes were references to programmes which are regional programmes (within the meaning of section 277) in relation to that service and are included in it in accordance with a condition imposed under subsection (4)(a) of that section; 
 (c) references to the regional character of the service were references to the regional character of parts of the service; 
 (d) subsection (4)(c) of this section were omitted; and 
 (e) references, in relation to programmes such as are mentioned in paragraph (b), to the area for which the service is provided were references to the part of that area where the people are living to whom those programmes are likely to be of particular interest.'.
 No. 560, in 
clause 339, page 290, line 1, at end insert— 
 ' ''Channel 3 programmes'' and ''expenditure'' each has the same meaning as in section 276; 
 ''original production'' has the same meaning as in section 270; 
 ''peak viewing time''— 
 (a) in relation to original productions, means a time determined by OFCOM for the purposes of section 270 to be a peak viewing time for the service in question; and 
 (b) in relation to news programmes or current affairs programmes, means a time so determined for the purposes of section 271.'.
 No. 561, in 
clause 339, page 290, line 2, leave out 
 'regional Channel 3 service, means' 
 and insert 
 'Channel 3 service, means (subject to subsection (5A))'.
 No. 562, in 
clause 339, page 290, line 11, leave out 'regional'.—[Dr. Howells.]
 Clause 339, as amended, ordered to stand part of the Bill.

Clause 340 - Action following review under s. 339

Amendments made: No.563, in 
clause 340, page 290, line 25, leave out 'subsection' and insert 'subsections (3A) to'.
 No. 564, in 
clause 340, page 290, line 35, after 'service', insert 
 'or (as the case may be) of any parts of it'.
 No. 565, in 
clause 340, page 290, line 45, leave out from 'throughout' to end of line 10 on page 291 and insert 
 'the twelve months immediately before the relevant date.'.—[Dr. Howells.]
 Clause 340, as amended, ordered to stand part of the Bill.

Clause 341 - Variation of local licence following change of control

Amendments made: No. 566, in 
clause 341, page 292, line 6, leave out 'or' and insert 'and'.
 No. 567, in 
clause 341, page 292, line 7, leave out 'and'.—[Dr. Howells.]
 Clause 341, as amended, ordered to stand part of the Bill. 
 Clause 342 ordered to stand part of the Bill.

Clause 343 - Meaning of ''control''

Andrew Lansley: I beg to move amendment No. 600, in
clause 343, page 293, leave out lines 34 to 36 and insert— 
 'the words ''to achieve the result that the affairs of the body are conducted in accordance with his wishes'' shall be omitted and there shall be substituted ''to control or materially to influence the policy of the body'';'.

Peter Atkinson: With this it will be convenient to discuss the following:
 Amendment No.658, in 
clause 343, page 293, line 34, leave out paragraph (a).
 Amendment No. 259, in 
clause 343, page 293, line 35, leave out from 'respects'' ' to end of line 36.
 Amendment No. 454, in 
clause 343, page 293, line 36, leave out paragraph (b).
 Amendment No. 260, in 
clause 343, page 293, line 37, leave out subsection (2).
 Amendment No. 659, in 
clause 343, page 294, line 11, at end add— 
 '(7) Before publishing any guidance under subsection (4) and before revising any such guidance under subsection (5), OFCOM must publish a draft of the proposed guidance or revised guidance in such manner as OFCOM consider appropriate for bringing it to the attention of those persons who in OFCOM's opinion are likely to be affected by such guidance. 
 (8) The publication of any such draft under subsection (7) must include notification of a period, which must not be less than one month after the day of the publication of the draft, within which representations relevant to the draft may be made to OFCOM. 
 (9) Before publishing any guidance under subsection (4) or revising it under subsection (5), OFCOM must take account of every representation about the draft of the proposed guidance or revised guidance that is made to them within the period specified in the notification mentioned in subsection (8).'.

Andrew Lansley: We have just agreed to clauses 339 to 342, where the definition of ''control'' implies that in those circumstances there can be variations of licences and so on. Whether there has been a change of control and the meaning of ''control'' are therefore important
 issues. I do not have a recollection to hand, but I believe that ''control'' has other applications elsewhere in the Bill; no doubt the Minister will have that in his briefing. I am sure that we will agree that the meaning of ''control'' is important for this purpose and that we need to get it right.
 Amendments Nos. 600 and 260 have subtly different purposes, but are entirely complementary to each other. The Government should accept both of them, but if they feel particularly aggrieved about amendment No. 260, I would point out that amendment No. 600 has merit on its own. 
 I will start with amendment No. 260 because my hon. Friend the Member for Maldon and East Chelmsford might want to say something about it. It may be helpful if I remind the Committee that subsection (2) relates to paragraph 1(3) in part 1 of schedule 2 of the Broadcasting Act 1990, as amended by the Broadcasting Act 1996. Under subsection (2), after we have been through all the rigmarole that is designed to secure that where somebody controls the affairs of a company, it acts in accordance with their wishes, or however that is to be amended, and after we have made sure that that includes the beneficial ownership of 50 per cent. of the shares or the voting powers or whatever, the Government propose that a 20 per cent. holding or interest—however elsewhere defined—in a body should be assumed to represent control unless the contrary is shown. I am not aware that that has precedent in the way in which we consider competition matters, particularly in relation to the definition of control. If the Minister thinks that there is a precedent, I would be interested to hear it. 
 It is inherently undesirable to make assumptions about whether a given level of interest in a company should represent control when that level of interest is substantially less than 50 per cent. We make assumptions where 50 per cent. is concerned and it is natural that any authority—a regulator or competition authority—should be increasingly interested the closer one gets to 50 per cent. However, I am not sure that it makes any sense to make an assumption of that sort down at 20 per cent. It would be better to deal with the issue on its merits. At that sort of level of interest in a company, it would be reasonable to operate on the basis of simply examining the merits of the case. If it becomes clear that control is being exercised, the regulation or review should be applied as necessary.

Kim Howells: The hon. Gentleman is interested in competition matters so he will know that in America a shareholding of 5 per cent. can be regarded as a legitimate base level for control of a company, because there are other factors involved.

Andrew Lansley: I do remember that, but we do not apply that precedent directly in the United Kingdom. In any event, there is no assumption that 5 per cent. interest represents control. I am not sure that even in America assumptions are made about control at given levels of voting power or interest. [Interruption.] My hon. Friend the Member for Lichfield is telling me from a sedentary position that he thinks that perhaps such assumptions are made.

Michael Fabricant: No. I was saying that my hon. Friend is absolutely right to say that under 50 per cent., the competition authorities may decide that there is control, but it is not an automatic assumption; it is automatic only after 50 per cent. In the Minister's example, 5 per cent. may be regarded as control, but only after investigation.

Andrew Lansley: I am grateful to my hon. Friend because that amplifies the point. My hon. Friend is more familiar with Connecticut legislation than I am.
 Amendment No. 260 is intended to remove that assumption. Of course, it will not mean that somebody who has a 20 per cent. interest in a company will be assumed not to have a controlling interest; the matter will simply be left open so that cases can be considered on their merits, as has been true up until now. I understand that the regulators find it inconvenient not to have an assumption, because their hand would be strengthened if they had one.

Kim Howells: I did not want to interrupt the hon. Gentleman in full flow, but I sometimes have fun searching for things.
 Twenty per cent. falls within the range of shareholdings for which the Office of Fair Trading and the Competition Commission may ask questions about material influence under mergers legislation. I make it clear that that is a rebuttable presumption. A person may be able to satisfy Ofcom that he does not have control, even if he holds an interest of 20 per cent. or more.

Andrew Lansley: I stand to be corrected, but I do not think that legally the OFT or the Competition Commission can assume that 20 per cent. is control. On the basis of evidence that may include a 20 per cent. interest, they may make, as the Minister says, a rebuttable presumption, but it is not a statutory assumption. As I understand it, under existing provisions in the Broadcasting Act 1990, the regulators work on the basis of a rebuttable presumption in the circumstances that we are discussing.
 Is the Minister saying that a rebuttable presumption is all right for the OFT but not sufficient for the broadcasting authorities, and that we need to move to something else? On the basis of what the OFT does, there is no statutory assumption that a 20 per cent. interest is regarded as control, unless it can be demonstrated to the contrary. It is perfectly fair for the regulatory authorities to make their own presumptions of a non-statutory character but then to be guided by the merits—that seems entirely reasonable. I do not understand why clause 343(2) is necessary. My hon. Friend the Member for Maldon and East Chelmsford has heard our exchanges and, if he wishes to, will no doubt amplify on the amendment. 
 Amendment No. 600 is somewhat different—perhaps this is nitpicking on my part. The Minister will recall, not least because he was present at the discussions, that the 1996 Act introduced new language. Paragraph 1(4)(b) of part 1 of schedule 2 of that Act, which was substituted for paragraph 1(3)(b) of part 1 of schedule 2 of the Broadcasting Act 1990, states: 
''(b) although he does not have such an interest in the body'',
 that is, a controlling interest of 50 per cent., 
''it is reasonable, having regard to all the circumstances, to expect that he will be able, by whatever means and whether directly or indirectly, to achieve the result that the affairs of the body are conducted in accordance with his wishes''.
 In clause 343(1)(a), the Government propose replacing ''will be able'' with 
''would (if he chose to) be able in most cases or in significant respects''
 to achieve the result that 
''affairs of the body are conducted in accordance with his wishes.''
 Amendments Nos. 259 and 454 relate to affairs, which I shall leave to my hon. Friend the Member for Maldon and East Chelmsford—that is the closest we will get to a joke in this debate. 
 I understand that the Government are trying to tighten up the provision and get rid of any looseness. However, I am worried that we are again using language and, potentially, interpretations that are different from those that are used elsewhere. Where might one look for an alternative approach? The obvious answer is in the Government's interpretation last year of how enterprises ceasing to be distinct enterprises would be defined. I have paraphrased it. Section 26(3) of the Enterprise Act 2002 says: 
''A person or group of persons able, directly or indirectly, to control or materially to influence the policy of a body corporate . . . may, for the purposes of subsections (1) and (2), be treated as having control of it.''
 I have taken the language of the 2002 Act and have substituted 
''to control or materially to influence the policy of the body''
 for 
''to have the affairs of the body conducted in accordance with his wishes.''
 I freely admit that I do not know and could not give an example of the circumstances in which one set of words would necessarily lead to a different conclusion from the other. However, if there is a parallel form of words intended to achieve the same effect in the 2002 Act that relates directly to the question of control, using the same words in the Bill will minimise the possibility of there being different interpretations and, over time, different precedent. 
 That is also the point about deleting subsection (2). Although we are dealing with the exercise of Broadcasting Act powers rather than competition law as such, it seems to me that there is a risk that the control exercised by Ofcom would be for a set of purposes defined under this legislation and would therefore acquire case law and precedent of its own, whereas the OFT might use a separate definition of ''control'', arrive at different conclusions using different language and hence acquire different precedent and case law. The two should not become separated. 
 It seems reasonable that broadcasting companies should expect the definition of control to be used in the 
 same way in this legislation as it is used in the 2002 Act for other industries and other purposes.

John Whittingdale: My hon. Friend has made many of the points that I wished to make better than I could have done, so I will not repeat them. However, I will make a few observations.
 My hon. Friend pointed out that the provision under discussion is almost unprecedented in competition law. It has also come out of nowhere. The clause under discussion and its associated clauses were not in the draft Bill and there was no consultation with industry about them. The policy document that was published by the Government on the draft Bill contained no suggestion that the threshold for control would be lowered. It simply stated that the Government proposed 
''to retain the existing definition of the circumstances in which a person controls a body corporate for the purposes of media ownership rules.''
 It added that 
''further consideration will be given to this definition.''
 As far as I am aware, the Joint Scrutiny Committee were not given any indication that the provision was contemplated, and industry was not given any opportunity to comment on it until it suddenly appeared when the Bill was published. 
 The Government argue that 20 per cent. should be regarded as indicating control unless the person holding that 20 per cent. can demonstrate otherwise. However, we have just been debating the restrictions on the ownership of ITN, in which, at present, five people have a 20 per cent. shareholding. It therefore appears that five completely separate companies have control over ITN. The Government now seem to be willing to increase the limit on ITN ownership from 20 to 40 per cent., presumably because they think that 40 per cent. will not give an undue degree of control. They said, in arguing that a 40 per cent. limit was still necessary, that they do not wish to have a single body in control of ITN. There seem to be contradictions in the argument. 
 The Bill states: 
''A person is to be assumed, unless the contrary is shown, to have control of a body corporate.''
 Will the Minister say how he envisages that that person will show to the contrary that he does not have control of the company? That would not be an easy thing to do. He could say, ''Look, they don't ever do what we suggest, and therefore we don't have control,'' but presumably there needs to be some mechanism by which that person can show that they are not in control in order to satisfy the requirement under the Act. 
 I invite the Minister to say more about how he envisages that working. It seems extraordinary that the burden of proof in this particular instance will be placed on the person who has the 20 per cent. shareholding. It is up to that person to demonstrate that he does not have control—it is not up to Ofcom to show that he does. That seems a deeply undesirable reversal. As my hon. Friend the Member for South 
 Cambridgeshire has indicated, that is without precedent.

Michael Fabricant: Is it not the case that that presumption of guilt—because it is that—is not only in breach of everything that we know to be fair but, more practically, could prevent investment in companies that need investment? The investing company may say, ''If the burden of proof is placed on us, our negotiations with Ofcom will produce uncertainty. Therefore, in a marginal situation, it is not worth investing in the first place.'' That could be to the broadcaster's detriment.

John Whittingdale: My hon. Friend is certainly right. Shareholders with less than 20 per cent. of a shareholding would give considerable pause for thought before increasing their investment if, under the terms of the Bill, they are automatically assumed to have control, unless they can prove otherwise.
 We have considerable concerns. My hon. Friend the Member for South Cambridgeshire has explained the rationale behind amendment No. 600. He has also helpfully explained why we feel strongly that subsection (2) should be removed. That is the purpose of amendment No. 260. 
 I shall raise a slightly less fundamental question, which relates to the specific change that subsection (1)(b) will make. Subsection (1)(b) seeks to substitute the words ''the affairs'' for the word ''affairs''. I shall resist being drawn down that road by my hon. Friend the Member for South Cambridgeshire. He suggested that somehow I might be an expert on that. I have no idea why he made that particular comment. 
 It is an interesting question, and I genuinely would, in the spirit of inquiry, ask the Minister why the Government feel it necessary to change the wording. The change's implications might broaden the number of people who could be said to be in control. Different directors deal with different aspects of a company's affairs. A finance director, for example, will deal with financial affairs. It could undesirably broaden the definition of control were we to look at ''affairs'' rather than ''the affairs''. I assume that there is some reason why the Government have felt it necessary to make that change. It would be helpful if the Minister could explain the rationale behind subsection (1)(b).

Kim Howells: In the light of the debate, I hope that it will be helpful, rather than deal with amendments first, to describe the effect of the clause. I shall deal with the amendments when I reach the division of the clause to which they relate.
 Clear rules for determining who controls a licence are necessary for media ownership to work effectively. That is what the clause is about. The present definition of control has three parts. First, anyone with more than a 50 per cent. shareholding or voting rights is deemed to have control. Secondly, there are provisions that deal specifically with deadlocking arrangements where a voting arrangement exists between a shareholder who has 50 per cent. of shares or voting rights and other shareholders. Thirdly, there is an additional definition of control that is amended by 
 clause 343(1) and is the subject of the amendments. That definition allows the regulators to conclude that a person who does not hold more than a 50 per cent. interest in a body none the less has control if it is reasonable to expect that he can by whatever means ensure that, in the words of the 1990 Act, 
''the affairs of the body are conducted in accordance with his wishes''.
 The intention behind that provision was to allow the regulators to consider cases in which a person has significant influence over a body, and to take into account a range of factors when determining whether that person has control of that body. Those might include contractual or other arrangements between shareholders, the nature of funding arrangements, and the constitution and management of the company. 
 Experience suggests that the current definition may be insufficiently robust and makes it too easy for people to set up arrangements that, under the rules, would not be deemed to give them control, even though in practice it would be clear that they had control. That is a concern, given that we are stripping right back the existing thicket of ownership rules. The rules that we will be left with are: the ban on ownership by political parties; the ban on religious organisations owning national media or multiplexes; the radio ownership rules including the cross-media provisions; and the two 20 per cent. cross-media ownership rules, national and regional. 
 Given the importance that we are attaching to those remaining rules as a safeguard of democratic debate, it is important that they work as intended and impinge directly on anyone who can control a relevant company. We therefore intend to make a number of changes in connection with the definition of control. First, clause 343(1) amends the provision in the 1990 Act so as to make it clear that the provision covers a case in which it would be reasonable, having regard to all the circumstances, to expect that a person would 
''be able in most cases or in significant respects''
 to achieve the result that the ''affairs of a body'' are 
''conducted in accordance with his wishes''.
 Paragraph 1(3)(b) of part 1 of schedule 2 to the 1990 Act, which the clause amends, states that a person controls a body corporate if he can achieve the result that the 
''affairs of the body are conducted in accordance with his wishes''.
 That is too narrow, as it could be read as meaning that someone controls a company only if they can, and do, ensure that affairs are always conducted in accordance with his wishes. Anyone who knows anything about companies will accept that it is quite possible to control a company without controlling all of its activities all the time. The reality is that someone controls a company if he or she can ensure that it will do what he or she wants. The changes introduced by the clause will allow Ofcom to adopt that test in determining questions of control. That is not a major change, but it closes a possible loophole that might allow people who clearly have control over a company to sidestep the ownership rules.

Michael Fabricant: But why is the provision couched in such a way that there is a presumption of guilt? That is the fact to which Conservative Members object.

Kim Howells: I did not expect to hear that. The hon. Gentleman has been involved in business, and knows well that Labour Members are as in favour of business as are Conservative Members. There is no intention to couch the provision in terms that suggest that we assume that every business is controlled by a robber baron. I guess that that is what the hon. Gentleman is hinting at.
 Under amendment No. 658, we would revert to the wording in the 1990 Act, and that would leave a loophole. There is no justification for going back to the potentially flawed definition in the 1990 Act. 
 Amendments Nos. 259 and 454 would remove subsection (1)(b) from clause 343. Instead of providing for the redefinition of control as being where a person can achieve the result that affairs of the body are conducted in accordance with his wishes, we would revert to the wording of the 1990 Act, which refers to ''the affairs''. The hon. Member for Maldon and East Chelmsford asked me to explain that. 
 The reason for the change from ''the affairs'' to ''affairs'' is simple. Without the change, a person could argue that, because they did not control every aspect of the affairs of a company, they did not control the company. That could result in complete nonsense. The revised form of words removes that loophole by allowing Ofcom to conclude that, in some cases, less than complete control could still constitute control for ownership purposes. It is simply a case of making sure that Ofcom can arrive at a common-sense judgment of what constitutes control. 
 Amendment No. 600, to which the hon. Member for South Cambridgeshire spoke for the most part, is related. It would replace the notion of a company's affairs being conducted in accordance with one's wishes with the different notion of being able to 
''control or materially to influence the policy of the body''.
 We resist the amendment for two equally good reasons. First, we believe that it would narrow the scope of the areas in which Ofcom could decide that a control situation had arisen. I hope that the hon. Gentleman, as well as other members of the Committee, will excuse that horrible phrase, ''a control situation''. I am sure that he knows what I mean. 
 We believe that the concept of affairs of a company would cover both specific decision-making areas and policy, whereas the concept of policy would seem to be narrower and would reduce the circumstances in which a person could be said to control a body. In other words, the amendment appears to try to undermine the ownership rules by making them bite in fewer cases. Secondly, and following on from that, the scope of the term ''policy'' is not clear, and to use it in this context would bring uncertainty to an area where clarity is to be preferred. 
 The second change in the clause is that there is a presumption of control in relation to any person with 
 a holding of 20 per cent. or more of shares or voting rights. That presumption will be rebuttable where it is shown that the person does not have control. 
 Amendment No. 260 would remove subsection (2) and thereby remove the rebuttable presumption that a 20 per cent. interest amounts to control. That would not be a constructive move. The figure of 20 per cent. is consistent with the application of, for example, the 20 per cent.-20 per cent. cross media ownership rule, and is within the range of shareholdings that the Office of Fair Trading and the Competition Commission are likely to scrutinise as constituting possible material influence under the mergers legislation in part 3 of the Enterprise Act 2002. 
 It can be extremely difficult for a regulator to get to the bottom of complex company arrangements.

Andrew Lansley: If the provision is consistent with part 3 of the Enterprise Act, which contains an established definition now of an enterprise that ceases to be distinct which is analogous to the definition of control, but the OFT does not require a statutory presumption that 20 per cent. represents control and must be rebutted, why does the Minister think it necessary for Broadcasting Act powers?

Kim Howells: I just said that the 20 per cent. is the figure at which the OFT and the Competition Commission, looking at any commercial organisation in this country, can assume that there is a degree of control there, and that there may even be the control person involved.

Michael Fabricant: Will the Minister give way?

Kim Howells: No. I want to make progress. I shall give way in a moment.
 It can be extremely difficult for a regulator to get to the bottom of complex company arrangements, as the hon. Member for Maldon and East Chelmsford will know because he has shadowed the Secretary of State for Trade and Industry. No doubt, he will have come across such cases, especially if they had been designed with the specific intention of bypassing the ownership rules. It puts matters on a more even footing if the onus is on a significant shareholder to show that his shareholding does not constitute control. We are beginning to drift towards the image painted by the hon. Member for Lichfield, in which people are trying to construct subterfuges to thwart Ofcom or any regulator that cares to find out who is in control.

Michael Fabricant: Under the Enterprise Act 2002, it is up to the OFT to prove the guilt. By including such provisions in the Bill, it will no longer be necessary for Ofcom to prove the guilt—if that is the right word—but for the investor or shareholder to prove his innocence. That is the point at issue.

Kim Howells: No, I am not talking about that. I am trying to make it easier for Ofcom to understand who controls the licence. Difficulty will arise in circumstances in which it is not clear who controls the licence. The clause is helpful. In most cases, it should be completely straightforward for a shareholder who does not control a company to show that that is the case. The idea of presumption is
 not unusual, nor is 20 per cent. an unreasonably low figure. As I told the hon. Member for South Cambridgeshire, if a company in America has no majority shareholder, any person holding more than 5 per cent. is deemed to have control. Of course, the matter will be investigated and, under the Bill, the presumption will be rebuttable. The person holding a 20 per cent. interest may take steps to satisfy Ofcom that, in such circumstances, he does not have control.
 The third change under the clause is to place Ofcom under a duty to issue guidance on the matters—not necessarily all of them—that it will take into account when deciding whether the test laid down under the provision has been met. That will be along the lines of the guidance presently provided by the Radio Authority. 
 Amendments Nos. 659 and 660 would require Ofcom to issue the guidance in draft and to consult those with an interest. Although it is true that, in some cases, Ofcom is required to consult on draft guidance, it will by no means always be the case. It depends on the importance of the issues and the benefits to be had from the consultation process. Furthermore, regardless of what the clause provides, Ofcom will be required by clause 3(3)(d) to adopt best regulatory practice. It would be better to allow Ofcom to decide on the best course of action in the light of best regulatory practice. It is mainly a technical issue. It is not obvious that consultation would be of real benefit, but I am happy to leave that to Ofcom. 
 Although the guidance is meant to be comprehensive, if Ofcom had always to consult before issuing guidance, that would simply give less scrupulous operators the opportunity of staying one step ahead of the game in respect of the new arrangements to get round the ownership rules. That is not something that we would wish to encourage. Again, it is best to leave it to Ofcom to see how best to handle the matter. 
 Taken together, the changes under the clause will ensure that there is a more robust regime for determining control and that the few remaining key media ownership rules cannot be undermined through arrangements designed specifically to avoid those controls. It is in no one's interests to have ownership rules that can be easily evaded, and the changes should prevent that happening.

Andrew Lansley: The Minister has failed to answer the points that I and my hon. Friend the Member for Maldon and East Chelmsford raised on amendments Nos. 600 and 260. Indeed, there is a difference between presumptions made by regulators in the exercise of their responsibilities and statutory assumptions. The former would be more onerous on the industry; instead, it should operate in the same framework—for example, as the OFT works in relation to the Enterprise Act 2002. The Office of Fair Trading customarily works with a rebuttable presumption, which it investigates; that is quite different from the statutory assumption that 20 per cent. gives control, an assumption that has to be satisfactorily proved otherwise.

Michael Fabricant: Students of jurisprudence would say that that is a rather worrying departure from the
 Enterprise Act 2002; the presumption of guilt is more like a Code Napoleon than the current code in the United Kingdom.

Andrew Lansley: I will not go down the path of constitutional law. However, whenever possible, the OFT and the Office of Communications should work side by side. The powers are not concurrent—they are not the OFT's powers—but the manner in which the powers are constructed, particularly the definitions, should be aligned. The argument for accepting amendment No. 260 is that it would avoid the interesting and novel concept of a statutory assumption of a 20 per cent. interest. It is also true in relation to amendment No. 600.
 I am surprised that the Minister should have launched an attack, by implying a lack of clarity and uncertainty in the definitions used under section 26 of the Enterprise Act, especially as the Government introduced them only last year. It seems to me that there is everything to be said for them. In so far as the Minister was saying that the difference between the two was that all the affairs of the company could now be taken into account, it seems that even if one does not control the policy of a body, controlling a subsidiary element of its activities implies that one is a controller of that body. 
 We do not want something not material to the policy of an organisation to cause one to be treated as if one has control over that body. Far from removing uncertainty and introducing clarification, the provision merely creates certainty that companies will be investigated in almost all circumstances and in relation to almost all activities. However, as the Enterprise Act develops and as the concept of control continues to be used by the OFT in a range of industries, there is likely to be more certainty about the definition of control. Certainty is much more likely to build up accurately and consistently if it based on the reference suggested in amendment No. 600, which is 
''to control or materially to influence the policy of the body'',
 than it is with a definition that has been around since 1990, which is being incrementally changed by broadcasting legislation in ways that will be distinct from and potentially at variance with definitions of control that have arisen under the Enterprise Act. 
 On the basis of the debate and the lack of force in the Minister's reply, I am not minded to withdraw the amendment, and I shall press it to a Division. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 6, Noes 12.

Question accordingly negatived. 
 Clause 343 ordered to stand part of the Bill.

Clause 344 - Annual factual and statistical report

Question proposed, That the clause stand part of the Bill. 
 Amendment made: No. 568, in 
clause 344, page 294, line 41, at end insert— 
 '( ) what it is appropriate to achieve by conditions and duties under section 269 and paragraphs 1 and 7 of Schedule 12 and the effectiveness for that purpose of the conditions and duties for the time being in force; 
 ( ) whether it would be appropriate to recommend to the Secretary of State that he exercises any of his powers under that section or those paragraphs; 
 ( ) the extent to which work on independent productions (within the meaning of that section and those paragraphs) that are produced in the United Kingdom is done in a range of production centres outside the M25 area;'.—[Dr. Howells.]
 Clause 344, as amended, ordered to stand part of the Bill.

Clause 345 - Grants to access radio providers

Question proposed, That the clause stand part of the Bill.

Peter Atkinson: With this it will be convenient to discuss new clause 35—Grants to community media—
No. NC35, to move the following Clause:— 
 '.—(1) OFCOM shall make such payments as they consider appropriate to the credit of a fund established under this section, to be known as the Community Media Fund. 
 (2) The Fund shall be under the management of a body established for the purposes of this section, which shall be called the Community Media Foundation. 
 (3) The Community Media Foundation shall consist of— 
 (a) a chairman appointed by OFCOM, and 
 (b) such number of other members appointed by OFCOM, not being less than four nor more than eight, as they may from time to time determine. 
 (4) The Fund may be applied by the Foundation in the making of grants for— 
 (a) the establishment and development of community media, 
 (b) the making of programmes to be carried by community media, 
 (c) the training of persons connected with community media, 
 (d) the provision of support services to community media, 
 (e) other related purposes. 
 (5) When making any grant out of the Fund in pursuance of subsection (4) the Foundation may impose such conditions as they think fit, including conditions requiring the grant to be repaid in certain circumstances. 
 (6) The Foundation shall perform their functions under this section with respect to the making of grants out of the Fund in such manner as they consider will secure a range and diversity of community media throughout the United Kingdom taking account of the greater need of areas and localities which are economically disadvantaged. 
 (7) OFCOM shall so exercise their power under subsection (3) to appoint the members of the Foundation as to secure that a majority of the members are persons who appear to them to represent a broad range of knowledge and experience of community media. 
 (8) Any sums required by OFCOM under subsection (1) may be paid out of money received in respect of wireless telegraphy licences, broadcast licences, administrative charges for electronic 
communications networks and services, and any other charges including financial penalties imposed on licensees. 
 (9) In this section ''community media'' means communications services provided primarily for the benefit of members of the public in a defined geographical locality or in a particular community and not operated by the BBC or for commercial purposes. 
 (10) In subsection (9) ''communications services'' includes— 
 (a) radio and television broadcasting; 
 (b) electronic communications networks and services; and 
 (c) content services carried by services falling within paragraphs (a) or (b).'.

Brian White: We debated earlier the need to refer to community media rather than access radio. New clause 35 would replace clause 345 and would include a community media fund in the Bill. An important principle of a funding mechanism for community media is that such arrangements should be at arm's length from the Government and the regulator. That is an important guarantee of editorial independence. It is necessary to avoid the funding mechanism becoming an additional tool of regulatory intervention. Such matters are similar to our debates on the Gaelic Media Service. I would have explained the purposes for which the fund would apply, had it not been for the time constraint. There is considerable experience to be gained from overseas of which I am sure the Minister is aware. Several controversial issues are involved, but given my record today, I am not sure that it would be worth my exploring them.

Richard Allan: Were there more time, I would be speaking in favour of the new clause. I want to put it on the record that it contains good points.

Brian White: There is a need to achieve the right balance between the different platforms for community media, whether television or radio. It is important that that is done, as it is to realise the role that a community media fund could play. I shall end my remarks now and avoid the controversial aspects with which I am sure the Minister will deal.

Andrew Lansley: One objection to new clause 35 is that its proposed subsection (8) would suck up money from any direction to pay for the fund, including certain moneys elsewhere in the Bill that should be used only for the purposes for which they were paid. That would be inherently undesirable. Under the new clause, it is proposed that the Government make grants, but I cannot find any reference to where the money is supposed to come from, other than out of the general Exchequer.

Kim Howells: I said to my hon. Friend the Member for Milton Keynes, North-East that I would give him some grief this morning. Things have not changed, despite the fact that it has snowed.
 The new clause would not be a sensible course of action. No decision has been taken on whether we will establish access radio, never mind an access radio fund. Such decisions will depend on the outcome of the current pilot projects. It would be better and more realistic to make sure that an access radio fund is up and running, so that we can learn from its operation before we consider the possibility of extending it to other media. We have no intention of funding access radio or community radio more generally by way of 
 what amounts to a levy on the whole broadcasting industry. Why should the licence fee of a small radio company increase
 so that somebody could be funded to run an access radio station on the internet? 
 Given that we do not support a levy on the industry, we see no need to set up bureaucratic structures such as those proposed in the new clause. Without wishing to pre-empt future decisions, I doubt whether the amounts that could be made available would justify the cost of such structures. It is perfectly satisfactory for any fund to be administered by Ofcom with such internal Chinese walls as are deemed necessary. 
 Question put and agreed to. 
 Clause 345 ordered to stand part of the Bill. 
 Clause 346 ordered to stand part of the Bill. 
 It being Five o'clock, The Chairman, pursuant to Sessional Order C relating to Programming [29 October 2002] and the Order of the Committee [10 December 2002], proceeded to put forthwith the Questions necessary to dispose of the business to be concluded at that time.

Peter Atkinson: I would be grateful if the Committee would bear with me because we have to follow a fairly complicated procedure. I propose to allow a separate decision on amendment No. 390, which was tabled by the hon. Member for Western Isles—[Interruption.] Would members of the Committee pay attention? I assure them that this was written by a much cleverer person than I.
 I understand that the Government propose to accept amendment No. 662 to clause 347, and I shall call the Minister to move it when we reach the clause. I now call the Minister—[Interruption.] Order; this will confuse me as much as it will confuse members of the Committee. I call the Minister to move amendments Nos. 435 to 440, 272, 441 and 442.

Schedule 15 - Amendments of Broadcasting Acts

Amendments made: No. 435, in 
schedule 15, page 424, line 33, at end insert— 
 '(2A) In subsection (2), after ''not later than'' there shall be inserted ''the day falling three months before''.'.
 No. 436, in 
schedule 15, page 425, line 6, after '''(12)', insert— 
 'A determination for the purposes of subsection (11)— 
 (a) must be made at least one year before the date determined; and 
 (b) must be notified by OFCOM to the person who holds the licence in question. 
 (13)'.
 No. 437, in 
schedule 15, page 430, line 36, at end insert— 
 '(3A) In subsection (2), after ''not later than'' there shall be inserted ''the day falling three months before''.'.
 No. 438, in 
schedule 15, page 431, line 24, at end insert— 
 '( ) After subsection (11) there shall be inserted— 
 ''(12) A determination for the purposes of subsection (11)— 
 (a) must be made at least one year before the date determined; and 
 (b) must be notified by OFCOM to the person who holds the licence in question.'''.
 No. 439, in 
schedule 15, page 431, line 38, at end insert— 
 '( ) In subsection (3), after ''not later than'' there shall be inserted ''the day falling three months before''.'.
 No. 440, in 
schedule 15, page 432, line 7, at end insert— 
 '(6) After subsection (13) there shall be inserted— 
 ''(14) A determination for the purposes of subsection (13)(c)— 
 (a) must be made at least one year before the date determined; and 
 (b) must be notified by OFCOM to the person who holds the licence in question.'''.
 No. 272, in 
schedule 15, page 438, line 34, leave out subparagraph (3) and insert— 
 '(3) In paragraph 2(1) (persons disqualified from membership of the Corporation), for paragraphs (b) to (d) there shall be substituted ''or 
 (b) a member or employee of OFCOM.''.'.
 No. 441, in 
schedule 15, page 444, line 24, at end insert— 
 'Duration of multiplex licences{**qc**} 
 88A (1) Section 16 of the 1996 Act (duration and renewal of multiplex licences) shall be amended as follows. 
 (2) For ''the Commission'', wherever occurring, there shall be substituted ''OFCOM''. 
 (3) In subsection (3), after ''not later than'' there shall be inserted ''the day falling three months before''. 
 (4) After subsection (12), there shall be inserted— 
 ''(12A) A determination for the purposes of subsection (12)— 
 (a) must be made at least one year before the date determined; and 
 (b) must be notified by OFCOM to the person who holds the licence in question.''.'.
 No. 442, in 
schedule 15, page 444, line 26, leave out 
 'sections 16 and 17 of the 1996 Act (duration and' 
 and insert 
 'section 17 of the 1996 Act ('.—[Dr. Howells.]
 Amendment made: No. 390, in 
schedule 15, page 447, line 27, leave out 'In'.—[Mr. MacDonald.]
 Amendments made: No. 443, in 
schedule 15, page 454, line 8, at end insert— 
 '(2A) In subsection (3), after ''not later than'' there shall be inserted ''the day falling three months before''.'.
 No. 444, in 
schedule 15, page 454, line 10, at end insert— 
 '(4) After subsection (12) there shall be inserted— 
 ''(12A) A determination for the purposes of subsection (12)— 
 (a) must be made at least one year before the date determined; and 
 (b) must be notified by OFCOM to the person who holds the licence in question.'''. 
 —[Dr. Howells.]
 Schedule 15, as amended, agreed to.

Clause 347 - Meaning of ''available for reception by members of the public''

Amendment made: No. 662, in 
clause 347, page 296, line 44, leave out 'decrypted' and insert 'not'.—[Dr. Howells.]
 Clause 347, as amended, ordered to stand part of the Bill.

Clause 348 - Interpretation of part 3

Amendment made: No. 380, in 
clause 348, page 298, line 42, at end insert— 
 ' ''initial expiry date'' has the meaning given by section [Meaning of ''initial expiry date''];'.—[Dr. Howells.]
 Clause 348, as amended, ordered to stand part of the Bill. 
 Clauses 349 to 354 ordered to stand part of the Bill. 
 Further consideration adjourned.—[Mr. Jim Murphy.] 
 Adjourned accordingly at three minutes past Five o'clock till Tuesday 4 February at five minutes to Nine o'clock.